You Must Be Brutally Honest If You Want To Save Your Business

Sugar coating the cold, hard truth is often convenient, even tempting. It's easy to go through life avoiding unpleasant realities — even if you're a hard-hitting, pull-no-punches businessperson. You may not even realize you're doing it. I'd like to convince you that you're better off being brutally honest, especially when it comes to unpleasant information. The truth might hurt, but it can save your business.

The truth is more profitable

Imagine you run a medium-sized business. Your son, Jack, has been involved in the business from a young age. He sees the company leadership as his birthright.

But Jack makes a lot of mistakes. He loses accounts by not paying attention. He wastes company cash on dumb ideas. He never knows his numbers. And he waits too long to fire bad people. If he weren't your son, you would have hopefully whacked him by now — or at least set him straight.

If you're like most people, though, you wouldn't have the heart to be honest. You'd be afraid of confronting Jack. You would spare his feelings. And you would avoid admitting to yourself that your son just isn't cut out for this job. In the end, you would give him the company — and chances are he would run it into the ground.

But you don't have to abandon reality. You can stop the madness. When you work for me, we make a simple bargain: you tell me the truth and I will tell you the truth. Period. Everyone's better off, including the company.

Lying to yourself will cost you

Beyond telling others the truth about their strengths and weaknesses, you also need to be honest with yourself.

It's hard to be self-critical. This is especially true for entrepreneurs, since you need confidence to take risks. But it's because you take such risks, often with your family's money, that you owe it to yourself to face up to your strengths and weaknesses. That may mean admitting that your big idea stinks — or even worse, that you're not the right guy to run with it. If you found it hard to fire Jack, try firing yourself!

No one said it was easy, but it's easier than losing everything because of your delusions. Your family and your wallet will thank you.

You can't hide from the truth

If you tell me your product is selling like hot cakes, that had better be true. Not just for my sake as an investor, but for yours, too. Why? Because the truth will always catch up to you. Let's say you come to me looking for an investment, and you say that your widget is flying off the shelves at Retailer A. After you leave, I make some calls to put you in Retailer B. Meanwhile, my team sets up a meeting with Retailer A. We find out that they pulled your widget months ago, and they barely remember your name.

What did you accomplish? It must have felt good to walk out of our meeting with everything going well. But in the end, it will always catch up with you. By putting off the moment of truth, you prevented everyone — including yourself — from spending that same time on other, better opportunities. Never pretend you can hide from the truth.